Pakistan's Economy Growing, but Poverty Remains

Pakistan is going through something of an economic renaissance. But many Pakistanis fear that the recent surge in growth rates may not be benefiting the one-third of the nation mired in poverty.

Looking just at the statistics, Pakistan's economy is surging. As the millennium dawned, annual growth was mired in the two percent range after years of government mismanagement and a drought that hit the key agricultural sector.

All this has changed. Recent estimates put gross domestic product growth at 5.5 percent, while the World Bank says eight percent growth is possible during this decade.

Various factors have spurred the revival, including President Pervez Musharraf's counter-terrorism alliance with the West, which has brought debt-relief and large aid packages.

But, as Pakistani political commentator Ayaz Amir points out, this influx of money has yet to make much of a dent in the country's endemic poverty.

"It is not really touching the vast pool of those people who are below the poverty line or those who are not really enjoying the benefits of all the big money that is being splashed around by the banks," he said.

The government says that about one in three Pakistanis live below the official poverty line - a level based on the wage needed to maintain a minimum caloric food intake.

How to improve living standards in Pakistan, the world's sixth most populous nation, is a matter of much debate.

The government has tried to fix food prices and provide a rudimentary welfare program for the nation's hungry.

Mr. Amir, however, says the efforts are neither efficient nor widespread enough to have any real effect.

"Those are just cosmetic measures," he said. "I mean these food [price] fixing things really do not amount to anything."

He believes the key to poverty reduction in the short term will involve curbing inflation and boosting job growth.

Improving the security situation will also be key to bringing in foreign investment, Mr. Amir says, noting recent insurgent activities by tribesmen in the southwest province of Baluchistan.

"The Pakistani law and order situation has a bearing on the total investment climate," he said. "I mean, who will come to Baluchistan? Who will invest in the interior of [the province of] Sindh?"

But for the long-term, Mr. Amir believes Pakistan will need to revamp its weak education system. He notes that India, with its superior system, has been able to advance into the lucrative high-technology and telephone service sectors.

World Bank country director John Wall agrees, and says the Pakistani government and donor nations have begun trying to improve the situation.

He adds, however, that success will be impossible to judge anytime soon.

"The pay-off from that is 20 years away, when people graduate and start contributing to society, so it's hard to tell," he said.

In the meantime, Mr. Wall says he is encouraged by Pakistan's recent infrastructure programs.

For example, the government has built a deep-sea port in the southwest city of Gwadar. It also hopes to build gas pipelines linking Pakistan with Iran and resource-rich Central Asia.

Mr. Wall says these sorts of projects are among the few proven methods for solving poverty in developing nations.

"It is very hard to think of a big national anti-poverty program that doesn't have more problems than you can fix," he said. "But one that the World Bank thinks that people are able to manage is a large rural public works program that is labor-intensive, that employs a lot of people."

Mr. Wall says the World Bank and donor community will be paying close attention to Pakistan's next household survey, due at the end of the year.

He says the survey's poverty rate may be well below its spike of around 32 percent of the population in 2001.

"I think a really good improvement is if that number ran below 30 percent," he said. "And I think that is quite possible."

The World Bank official says that if the country can keep its annual population growth at the current rate of around two percent, then average per-capita income in Pakistan could likely double within the next 10 years.